Financial markets and commodity prices are stabilizing. Oil, selected industrial commodities, and U.S. housing prices have risen from the bottoms of 2009. Brent crude oil prices, which averaged $40 per barrel in December 2008, rose to nearly $70 per barrel in August. Crude oil prices have dropped 40 percent in 2009, but will likely be up by around 20 percent on average in 2010. Stock markets have risen, reflecting improved economic prospects in 2010.

U.S. and Canadian GDP are expected to grow 2 percent in 2010, hampered by weak growth in consumption as households trim debt. Mexico will see 4-5 percent growth as U.S. growth recovers, and world commodity prices rise further. The Eurozone’s expected growth in 2010 of about zero will dampen the world recovery.

Japan will see about 1 percent growth. Developed economies overall will grow about 1 percent in 2010. Developing economies are expected to grow around 5 percent, being the major source of strengthening world growth in 2010. Output in Asia is expected to be up 6 percent, due to increased trade with developed economies, a surge in intra-Asian trade, and higher domestic demand despite sluggish Japanese growth. Chinese growth of 9 percent will lead the Asian economy.

Taiwan, Korea, Malaysia, and Thailand are expected to see 2-3 percent growth in 2010. Indonesia’s and India’s growth of 4 and 7 percent, respectively, will round out the Asian growth picture. World CPI inflation will pick up to 3 percent with India at between 4 and 5 percent. South America has expected growth of 3 percent in 2010. Brazil will lead the way with 4 percent growth in GDP. Output in Colombia, Argentina, and Venezuela is slated to grow about 2 percent.

Source: ERS/USDA